October 24, 2010


This is an interesting article on Newsweek.com showing that success in social network software/branding is a somewhat limiting experience. Not only has MySpace been going under, slowly but surely, but one of the former glorious success stories, Digg, is now..

... pretty much worth nothing.
Four years ago Kevin Rose, the boyish, 20-something founder of Digg, was on the cover of BusinessWeek under a headline that screamed HOW THIS KID MADE $60 MILLION IN 18 MONTHS. Digg wasn’t rocket science. It was just a Web site where people could vote for news stories they liked so that popular stories rose to the top. And Rose hadn’t actually made $60 million. That was just what his shares in Digg would be worth based on pie-in-the-sky estimates of the company’s value. “People in the know say Digg is easily worth $200 million,” BusinessWeek wrote.

The problem with those “people in the know” is that Silicon Valley is filled with them, and most of them don’t know all that much. Digg struggled for a few years, then swooned, and now finds itself in free fall. One year ago the site attracted 18 million unique visitors in the United States. By last month that number had plunged to 5.3 million, according to ComScore. (Digg says the figures are higher than what ComScore reports but concedes traffic has dropped.)

Rose never got his $60 million, and chances are he won’t. Digg will generate about $15 million in revenue this year and still operates at a loss, estimates Michael Arrington, editor of TechCrunch, a blog that tracks Silicon Valley startups. Digg’s backers would likely be willing to sell the company now for as little “as $20 million to $30 million,” Arrington says. That’s a bummer, since investors have pumped $40 million into this outfit since it was founded in 2004, and Rose and his backers are rumored to have had chances to sell the company for $130 million.
Now, if we are looking at Facebook, this is a company that really doesn't do anything other than Digg (or MySpace or Friendster), only that right now, everybody is on Facebook (and their dog). Now, I am not dissing Facebook as a concept, I am dissing it, however, due to their policies and lack thereof, due to their apps being trojans that leech their customers' private information and selling it to the highest bidder. Again, nothing new there per se, Easy Cash in Germany just got slammed for doing exactly that, allowing corporate clients to use their databases as a way of profiling customers' buying choices.

But in the end, Facebook is a luxury, not a necessity. It's there to fuel our egoes. And because it is free for now, it is an easy choice to make to get on it.

Right now, Mark Zuckerberg is worth billions.

A few years ago, he refused to sell the company to Yahoo for 1 billion.

He might live to regret that choice. He's still young, you know.